Polar Power Reports Third Quarter 2018 Financial Results
November 13 2018 - 4:16PM
Management to Host Conference Call Today at
4:30 p.m. ET
Polar Power, Inc. (NASDAQ: POLA), a global provider of prime,
backup and solar hybrid DC power solutions, reported its financial
results for the third quarter ended September 30, 2018.
Third Quarter 2018 and Subsequent
Highlights:
• Quarterly Highlights
- Backlog as of September 30, 2018 improved to $11.5 million, as
compared to $5.8 million at the end of Q2 2018. A significant
portion of the growth is a result of production orders from two
Tier-1 telecom customers in the U.S. market. Backlog as of
November 9, 2018 was $15.2 million.
- During Q3 2018, we experienced shortages in components and
engines from our supply chain related to uncertainty over tariffs.
This caused a disruption in our manufacturing and shipments and
negatively impacted our revenue and profits in the quarter. The
supply chain disruptions were short-term in nature and have since
been resolved.
- Net sales increased 67% to $5.1 million in Q3 2018, as compared
to $3.0 million during Q3 2017, and increased 51% to $15.7 million
for the first nine months of 2018, as compared to $10.4 million for
the first nine months of 2017.
- Gross margin increased to 30% during Q3 2018 from 27% in Q3
2017 largely due to higher revenue and better fixed cost
absorption. On sequential basis, Q3 2018 gross margin declined to
30% from 36% in Q2 2018. The decline was driven by two key factors:
lower manufacturing efficiencies related to the start-up production
of new generator models, and higher component costs due to
short-term disruptions in our supply chain that required us to use
alternate, higher price sources.
- Net loss was $(0.7) million in Q3 2018, or $(0.07) per basic
and diluted share, as compared to net loss of $(0.4) million, or
$(0.04) per basic and diluted share in Q3 2017. Increase in
net loss was attributable to increases in production staff,
machinery and new manufacturing facility, while revenue was lower
due to supply chain disruption.
Management Commentary
“During the Q3 2018, we made significant progress towards our
growth objectives. Our backlog as of November 9, 2018 has grown to
$15.2 million, and we have remedied our supply chain issues that
impacted shipments last quarter that prevented us from meeting our
revenue goal. The tariffs put in place and the possible trade wars
created an international and domestic stampede for engines,
electronic parts, aluminum, and steel. This had a negative impact
on our manufacturing efficiency and production schedules during the
third quarter. This has since been resolved and we are back
on track with our original suppliers. Although the tariffs impacted
some parts of our supply chain during the quarter, I would note
that Polar directly imports only a single item from China. Our raw
materials and components come primarily from the USA, Japan, Korea,
Canada, and Europe, which has been our policy since 1979,” said
Polar Power’s CEO, Mr. Arthur Sams.
Mr. Sams continued, “Despite some supply chain disruptions
during the quarter, we have made significant progress on our key
strategic goals year-to-date. We continue to develop sales offices
globally, achieve product certifications from major Tier-1 telecom
providers in the U.S. and abroad and have expanded our aftermarket
support and service infrastructure in the U.S. Our investments in
these objectives are now delivering results with a more diversified
customer base and record backlog. In anticipation of what we
believe will be a solid demand cycle, we have also increased our
manufacturing capacity to accommodate expected demand. We also
continue our focus on key R&D and engineering objectives and
continue to develop products integrating solar and lithium storage
technologies with our DC generators, which are designed for
emerging markets for use in areas hindered by unreliable electric
grids,” concluded Mr. Sams.
Conference Call Details
Polar Power CEO Arthur Sams, COO Rajesh Masina and CFO Luis
Zavala will host the conference call, followed by a question and
answer period.
To access the call, please use the following information:
Date: |
|
Tuesday, November 13,
2018 |
Time: |
|
4:30 p.m. ET, 1:30 p.m.
PT |
Toll-free dial-in
number: |
|
1-888-394-8218 |
International dial-in
number: |
|
1-323-794-2591 |
Conference ID: |
|
9931535 |
Please call the conference telephone number 5-10 minutes prior
to the start time. An operator will register your name and
organization. If you have any difficulty connecting with the
conference call, please contact Integra Investor Relations at
1-415-233-7094.
The conference call will be broadcast live and available for
replay http://public.viavid.com/index.php?id=132075 and via the
investor relations section of the Company’s website at
www.polarpower.com.
A replay of the conference call will be available after 7:30
p.m. Eastern Time through November 20, 2018.
Toll-free replay
number: |
|
1-844-512-2921 |
International replay
number: |
|
1-412-317-6671 |
Replay ID: |
|
9931535 |
About Polar Power, Inc.Gardena,
California-based Polar Power, Inc. (NASDAQ: POLA), designs,
manufactures and sells direct current, or DC, power systems,
lithium battery powered hybrid solar systems for applications in
the telecommunications market and, in other markets, including
military, electric vehicle charging, cogeneration, distributed
power and uninterruptable power supply. Within the
telecommunications market, Polar’s systems provide reliable and
low-cost energy for applications for off-grid and bad-grid
applications with critical power needs that cannot be without power
in the event of utility grid failure. For more information, please
visit www.polarpower.com. or follow us
on www.linkedin.com/company/polar-power-inc/
Safe Harbor Statement Under the Private
Securities Litigation Reform Act of 1995This news release
contains certain statements of a forward-looking nature relating to
future events or future business performance. Forward-looking
statements can be identified by the words “expects,” “anticipates,”
“believes,” “intends,” “estimates,” “plans,” “will,” “outlook” and
similar expressions. Forward-looking statements are based on
management’s current plans, estimates, assumptions and projections,
and speak only as of the date they are made. With the exception of
historical information, the matters discussed in this press release
including, without limitation, Polar Power’s expectation of a solid
demand cycle; and Polar Power’s expectation to continue its
focus on R&D and engineering objectives and continue to develop
products integrating solar and lithium storage technologies with
its DC generators, which are designed for emerging markets for use
in areas hindered by unreliable electric grids are forward-looking
statements and considerations that involve a number of risks and
uncertainties. The actual future results of Polar Power could
differ from those statements. Factors that could cause or
contribute to such differences include, but are not limited to,
adverse domestic and foreign economic and market conditions,
including demand for DC power systems; trade tariffs on raw
materials; changes in domestic and foreign governmental regulations
and policies; and other events, factors and risks. We undertake no
obligation to update any forward-looking statement in light of new
information or future events, except as otherwise required by law.
Forward-looking statements involve inherent risks and
uncertainties, most of which are difficult to predict and are
generally beyond our control. Actual results or outcomes may differ
materially from those implied by the forward-looking statements as
a result of the impact of a number of factors, many of which are
discussed in more detail in our reports filed with the Securities
and Exchange Commission.
Media and Investor Relations:Shawn
Severson Integra Investor Relations Shawn M. Severson +1
415-233-7094 shawn@integra-ir.com @Integra IR
www.integra-ir.com
Company Contact:Polar Power, Inc.249 E. Gardena
Blvd.Gardena, CA 90248Tel:
310-830-9153ir@polarpowerinc.comwww.polarpower.com
|
POLAR POWER INC. |
CONDENSED BALANCE SHEETS |
|
September 30,2018 |
|
December 31,2017 |
|
(Unaudited) |
|
|
ASSETS |
|
|
|
Current assets |
|
|
|
Cash and cash
equivalents (including restricted cash of $1,002,304 and $1,001,180
at September 30, 2018 and December 31, 2017, respectively) |
|
10,607,455 |
|
$ |
14,201,163 |
Accounts
receivable |
|
3,751,157 |
|
|
3,058,266 |
Inventories, net |
|
7,413,615 |
|
|
5,487,053 |
Prepaid
expenses |
|
836,052 |
|
|
236,670 |
Refundable income taxes |
|
629,316 |
|
|
629,316 |
Total
current assets |
|
23,237,595 |
|
|
23,612,468 |
|
|
|
|
Other
assets: |
|
|
|
Property
and equipment, net |
|
1,426,098 |
|
|
824,076 |
Deposits |
|
111,701 |
|
|
87,496 |
Total
assets |
|
24,775,394 |
|
|
24,524,040 |
|
|
|
|
LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
Current
liabilities |
|
|
|
Accounts
payable |
$ |
789,548 |
|
$ |
757,753 |
Customer
deposits |
|
202,324 |
|
|
40,039 |
Accrued
liabilities and other current liabilities |
|
683,715 |
|
|
586,391 |
Current
portion of notes payable |
|
196,323 |
|
|
110,237 |
Total current
liabilities |
$ |
1,871,910 |
|
|
1,494,420 |
Notes payable, net of
current portion |
$ |
621,113 |
|
|
126,818 |
|
|
|
|
Total liabilities |
|
2,493,023 |
|
|
1,621,238 |
|
|
|
|
Commitments and
Contingencies |
|
|
|
|
|
|
|
Stockholders’
Equity |
|
|
|
Preferred
stock, $0.0001 par value, 5,000,000 shares authorized, no shares
issued and outstanding |
|
— |
|
|
— |
Common
stock, $0.0001 par value, 50,000,000 shares authorized, 10,143,158
shares issued and outstanding |
|
1,014 |
|
|
1,014 |
Additional paid-in
capital |
|
19,483,002 |
|
|
19,250,955 |
Retained earnings |
|
2,798,355 |
|
|
3,650,833 |
Total stockholders’
equity |
|
22,282,371 |
|
|
22,902,802 |
|
|
|
|
Total liabilities and
stockholders’ equity |
$ |
24,775,394 |
|
$ |
24,524,040 |
|
|
|
|
|
POLAR POWER INC. CONDENSED STATEMENTS OF
OPERATIONS |
(Unaudited) |
|
Three Months Ended |
|
Nine Months Ended |
|
September 30, |
|
September 30, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Net
Sales |
|
5,061,158 |
|
|
|
3,030,026 |
|
|
|
15,748,845 |
|
|
|
10,438,761 |
|
|
|
|
|
|
|
|
|
Cost of Sales |
|
3,530,847 |
|
|
|
2,201,083 |
|
|
|
10,672,707 |
|
|
|
6,925,464 |
|
|
|
|
|
|
|
|
|
Gross Profit |
|
1,530,311 |
|
|
|
828,943 |
|
|
|
5,076,138 |
|
|
|
3,513,297 |
|
|
|
|
|
|
|
|
|
Operating Expenses |
|
|
|
|
|
|
|
Sales
and Marketing |
|
717,983 |
|
|
|
395,793 |
|
|
|
1,968,152 |
|
|
|
861,230 |
|
Research
and development |
|
571,300 |
|
|
|
480,405 |
|
|
|
1,371,981 |
|
|
|
947,427 |
|
General
and administrative |
|
996,087 |
|
|
|
633,776 |
|
|
|
2,562,577 |
|
|
|
1,988,831 |
|
Depreciation and amortization |
|
8,897 |
|
|
|
7,621 |
|
|
|
26,441 |
|
|
|
23,029 |
|
Total operating expenses |
|
2,294,267 |
|
|
|
1,517,595 |
|
|
|
5,929,151 |
|
|
|
3,820,517 |
|
|
|
|
|
|
|
|
|
Loss from operations |
|
(763,956 |
) |
|
|
(688,652 |
) |
|
|
(853,013 |
) |
|
|
(307,220 |
) |
Other
(expenses) income |
|
|
|
|
|
|
|
Interest
expenses |
|
(2,777 |
) |
|
|
(4,463 |
) |
|
|
(8,181 |
) |
|
|
(14,656 |
) |
Other
income (expenses), net |
|
9,616 |
|
|
|
18,531 |
|
|
|
8,716 |
|
|
|
42,605 |
|
Total other (expenses) income, net |
|
6,839 |
|
|
|
14,068 |
|
|
|
535 |
|
|
|
27,949 |
|
|
|
|
|
|
|
|
|
Loss before income taxes |
|
(757,117 |
) |
|
|
(674,584 |
) |
|
|
(852,478 |
) |
|
|
(279,271 |
) |
Income
tax benefit |
|
- |
|
|
|
264,681 |
|
|
|
- |
|
|
|
113,118 |
|
Net Income (Loss) |
|
(757,117 |
) |
|
|
(409,903 |
) |
|
|
(852,478 |
) |
|
|
(166,153 |
) |
|
|
|
|
|
|
|
|
Net
Income (Loss) per share – basic and diluted |
$ |
(0.07 |
) |
|
$ |
(0.04 |
) |
|
$ |
(0.08 |
) |
|
$ |
(0.02 |
) |
Weighted
average shares outstanding, basic and diluted |
|
10,143,158 |
|
|
|
10,143,158 |
|
|
|
10,143,158 |
|
|
|
10,143,158 |
|
|
|
|
|
|
|
|
|
|
POLAR POWER, INC. |
CONDENSED STATEMENTS OF CASH FLOW |
(Unaudited) |
|
|
|
Nine Months Ended |
September 30, |
|
2018 |
|
2017 |
Cash flows from
operating activities: |
|
|
|
Net Loss |
$ |
(852,478) |
|
$ |
(166,153) |
Adjustments to
reconcile net loss to net cash used in operating activities: |
|
|
|
Fair value of vested
stock options |
|
232,047 |
|
|
— |
Depreciation and
amortization |
|
269,726 |
|
|
185,758 |
Changes in operating
assets and liabilities |
|
|
|
Accounts
receivable |
|
(692,891) |
|
|
2,425,017 |
Inventories |
|
(1,926,562) |
|
|
(436,735) |
Prepaid
expenses |
|
(599,382) |
|
|
(153,257) |
Deposits |
|
(24,205) |
|
|
(10,500) |
Refundable income taxes |
|
— |
|
|
(1,257,585) |
Deferred
tax assets |
|
— |
|
|
(52,641) |
Accounts
payable |
|
31,795 |
|
|
(388,244) |
Income
taxes payable |
|
— |
|
|
(1,227,308) |
Customer
deposits |
|
162,285 |
|
|
(1,843) |
Accrued
expenses and other current liabilities |
|
97,324 |
|
|
(111,988) |
Net cash used in
operating activities |
|
(3,302,341) |
|
|
(1,195,479) |
|
|
|
|
Cash flows from
investing activities: |
|
|
|
Acquisition of property
and equipment |
|
(208,998) |
|
|
(182,397) |
Net cash used in
investing activities |
|
(208,998) |
|
|
(182,397) |
|
|
|
|
Cash flows from
financing activities: |
|
|
|
Repayment of notes |
|
(82,369) |
|
|
(85,254) |
Net cash used in
financing activities |
|
(82,369) |
|
|
(85,254) |
|
|
|
|
Decrease in cash and
cash equivalents |
|
(3,593,708) |
|
|
(1,463,130) |
Cash and cash
equivalents, beginning of period |
|
14,201,163 |
|
|
16,242,158 |
Cash and cash
equivalents, end of period |
$ |
10,607,455 |
|
$ |
14,779,028 |
|
|
|
|
|
|
Supplemental
Cash Flow Information: |
|
|
Taxes Paid |
$ |
— |
|
$ |
2,424,417 |
Interest Paid |
|
8,181 |
|
|
10,193 |
Supplemental
non-cash investing and financing activities: |
|
|
|
Assets acquired through
issuance of notes payable |
$ |
662,750 |
|
$ |
— |
|
|
|
|
|
|
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